Wednesday, July 22, 2020

Bearish Divergence On GBPJPY

Marco Tosoni

FХ Strategist & Financial Commentator

After setting a bottom around 124.00 area during the month of March, the pound has restored its relative strength with a rising movement towards almost 140.00 where this pair has started a new bearish correction until the second half of June, when the current bullish swing began nearby the support zone formed around 131.00 area.

During yesterday’s session, anyway, after setting a new relative top nearby 136.50 area, this pair has started a first technical correction, with a closure around 136.00 and the formation of a shooting star candle.

Looking at the RSI indicator, we can now detect a perfect short-term bearish divergence, that could favour a fast technical correction towards last week’s lows.

The average true range on his hand, it’s still falling and it’s ready to reach its 2019 lowest values and this element should favour the next formation of a trading range and a technical correction in the coming sessions with the Japanese Yen to get stronger.

The setup would be activated in case of a breakdown of yesterday’s bottom around 135.50 area. The stop loss must be placed at 136.50 above yesterday’s tops, while the target price can be expected around 134.50 area nearby the weekly lows zone.

As always I recommend to trade carefully and to plan at best every move. Don’t forget to subscribe to NBHM YouTube Channel to stay up to date with the financial markets! Have a good trading and see you for the next video.

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